Company Overview - Sundart Holdings Limited is a leading integrated interior decoration contractor in Hong Kong, Macau, and China, specializing in residential and hotel projects[2]. - The company expanded its interior decoration business to Macau and China in 2005 and 2017, respectively[2]. - In October 2010, Sundart acquired a general contractor to enhance its capabilities in construction and interior decoration[2]. - Sundart has undertaken multiple large-scale interior decoration projects across Hong Kong, Macau, and China[2]. - Sundart's operational headquarters is located in Hong Kong, with a significant presence in Kowloon[6]. - The company is listed on the Hong Kong Stock Exchange under the stock code 1568[6]. Financial Performance - The company's revenue for the year was HKD 5,390.8 million, an increase from HKD 4,982.9 million in the previous year, representing a growth of approximately 8.2%[25]. - The net profit for the year was HKD 381.2 million, down from HKD 421.1 million in the previous year, indicating a decrease of about 9.5%[25]. - Basic earnings per share were HKD 0.1766, compared to HKD 0.1951 in the previous year, reflecting a decline of approximately 7.3%[25]. - The board recommended a final dividend of HKD 0.05 per share, with total dividends for the year amounting to approximately 39.6% of the distributable profits, consistent with the prospectus dividend policy[25]. - The group's revenue from interior decoration business slightly decreased by HKD 1.6 million to HKD 4,204.7 million, compared to HKD 4,206.3 million in the previous year[40]. - The gross profit from the interior decoration business increased by HKD 72.1 million or 11.5% to HKD 696.4 million, up from HKD 624.3 million in the previous year[40]. - The gross profit margin for the interior decoration business rose from 14.8% in the previous year to 16.6% in the current year, attributed to increased use of the group's own produced interior decoration materials[40]. - The group recorded a net loss of HKD 9.8 million from other income, mainly due to a fair value loss of HKD 36.5 million on listed equity securities[49]. - Net profit decreased by HKD 39.9 million or 9.5% to HKD 381.2 million, attributed to increased administrative expenses and impairment losses[49]. Project and Operational Highlights - The company completed 19 individual interior decoration contracts, each valued at no less than HKD 50 million, along with 11 renovation and construction projects during the year[25]. - The group completed a total of 19 interior decoration projects during the year, with a total contract value of HKD 3,249.0 million, of which HKD 1,000.6 million was recognized as revenue[39]. - As of December 31, 2018, the group had 52 projects on hand, with a total contract value of approximately HKD 7,745.1 million and remaining work value of approximately HKD 3,553.0 million[39]. - Revenue from renovation and construction business increased by HKD 364.8 million or 47.7% to HKD 1,128.8 million, driven by nearing completion of projects in Chai Wan and Lantau Island[43]. - Revenue from manufacturing, procurement, and distribution of interior decoration materials surged by HKD 44.7 million or 354.8% to HKD 57.3 million, primarily due to increased sales in Macau and the UK[45]. Market and Economic Context - The gaming industry in Macau recorded double-digit growth during the year, supported by improved cross-border facilities and increased tourist numbers[26]. - The completion and opening of the Hong Kong-Zhuhai-Macau Bridge provided unprecedented transportation convenience, contributing to the growth of the gaming, retail, and tourism sectors[26]. - The total investment in real estate development in China reached RMB 1,202.64 billion, with a year-on-year growth of 9.5%[36]. - The residential property investment in China amounted to RMB 851.92 billion, reflecting a year-on-year increase of 13.4%[36]. - The GDP of Hong Kong grew by 2.9% year-on-year in Q3 2018, down from 3.6% in the same period of 2017[34]. - The number of first-hand residential sales in Hong Kong decreased by 16.2% year-on-year to 15,633 units in 2018, compared to 18,645 units in 2017[34]. - The Macau gaming industry generated revenue of MOP 303.9 billion in 2018, marking a year-on-year increase of 14.0%[35]. Corporate Governance - The board of directors includes members with diverse backgrounds, enhancing the company's governance and strategic oversight[86]. - The board consists of eight members, including four executive directors, one non-executive director, and three independent non-executive directors[97]. - The company has adopted a standard code for securities trading, confirming compliance by all directors throughout the year[96]. - The company emphasizes high standards of corporate governance and has established policies and procedures in line with applicable codes[94]. - The chairman and CEO roles are separated, with Mr. Liu as chairman and Mr. Ng as CEO, complying with governance codes[106]. - The company has arranged appropriate insurance for directors and senior officers against legal liabilities arising from corporate activities[107]. - The board is committed to continuous professional development for all directors to enhance their knowledge and skills[108]. - The company aims to ensure all affairs are conducted in accordance with applicable laws and regulations, safeguarding shareholder interests[95]. Risk Management and Internal Controls - The company has established an Audit Committee on December 1, 2015, responsible for reviewing financial statements and risk management systems[131]. - The board has established a risk management framework that includes a risk management team and regular assessments of risks impacting business objectives, conducted at least annually[158]. - The risk management and internal control systems are designed to manage risks rather than eliminate them, providing reasonable assurance against significant misstatements or losses[161]. - The board has a clear governance structure to oversee risk management and ensure alignment with corporate strategy and compliance[159]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to corporate social responsibility while focusing on business development, preparing an Environmental, Social, and Governance (ESG) report in accordance with the guidelines set out in the listing rules[178]. - The ESG report covers significant environmental and social issues related to the company's main business activities in Hong Kong and Macau, specifically in interior decoration and construction projects[179]. - The company has established a governance structure for ESG, with the board of directors as the highest decision-making body, continuously reviewing ESG performance and strategies[181]. - The company engaged independent professional consultants to ensure the appropriateness and effectiveness of internal controls and risk assessments related to ESG[181]. - The company emphasizes compliance with legal regulations and has implemented measures to manage pollution, resource recycling, and energy usage[185]. - The company has a structured approach to stakeholder communication, including meetings, surveys, and public forums to enhance trust and collaboration[184]. Employee and Safety Management - The total employee cost for the year was HKD 379.0 million, an increase from HKD 345.2 million in the previous year, attributed to a rise in the average number of full-time employees and salary increases[65]. - The average number of full-time employees increased by 78 or 5.8% to 1,430 in the year, compared to 1,352 in the previous year[65]. - The company emphasizes the importance of employee health and safety, adhering to relevant regulations such as the Occupational Safety and Health Ordinance in Hong Kong[199]. - A dedicated safety management committee has been established to oversee the implementation of health and safety policies, ensuring compliance with industry trends and regulations[200]. - The company conducts biannual comprehensive audits of its safety management by accredited external auditors, continuously improving existing safety management practices[200]. - Regular fire drills and emergency response training are conducted to enhance employees' emergency knowledge and ensure a safe working environment[200]. - No significant violations of health and safety laws and standards were reported during the year, indicating a strong compliance record[200].
承达集团(01568) - 2018 - 年度财报